Reevely: Add a bungled Toronto real-estate development to the litany of Liberal screwups

A Toronto office tower you and I helped build to hold scientific researchers isn't even half-full, and it's going to cost us more than $300 million to take it over and fill it with bureaucrats so at least somebody will be using it.

David Reevely

Published on: May 29, 2014 | Last Updated: May 30, 2014 6:26 AM EDT

An architectural rendering of the MaRS Phase 2 tower the provincial government is buying rather than losing it to a loan default because Toronto's MaRS Discovery District can't fill it with tenants.Rendering from MaRS Discovery District

A Toronto office tower you and I helped build to hold scientific researchers isn’t even half-full, and it’s going to cost us more than $300 million to take it over and fill it with bureaucrats so at least somebody will be using it.

The provincial Conservatives, who revealed the botch job by releasing supposedly secret cabinet documents Thursday morning, call it a secret bailout, a scandal on par with quasi-privatizing Ontario’s air-ambulance service.

The truth is not quite as bad as that. But it’s bad, another case of Ontario’s Liberals selling a big pretty dream and then messing up the execution.

A 20-storey tower at University Avenue and College Street, within sight of Queen’s Park and on the edge of Toronto’s hospital nexus, the awkwardly named MaRS Phase 2 building was supposed to be an incubator for private high-tech firms focused on the life sciences. It has hundreds of thousands of square feet for state-of-the-art labs and offices. It’s the latest stage in the development of the “MaRS Discovery District,” whose first few buildings, at least, seem to be doing what they were supposed to.

The whole district is underpinned by a bunch of public-private partnerships and different funding arrangements to get buildings constructed and renovated. This one is with an American outfit called Alexandria Real Estate, which has built such things in clusters across the United States, including in Boston, New York City and Raleigh-Durham.

According to its own website, 12 of the 21 floors in the new Toronto building are vacant, counting ground and concourse retail locations. And according to the documents released by the Tories, only three per cent of the total space has been leased to “innovation tenants.”

Besides the existing MaRS buildings, similar “research towers” have been opened in just the last several months by both SickKids Hospital and the University Health Network, so there’s a glut.

MaRS Phase 2 can’t pay its bills. The government’s solution, not quite yet sealed and certified (which is why it hadn’t been announced), is essentially to buy the building. Then they’ll move government officials in from leased offices elsewhere, in a manoeuvre that officials say will ultimately save $200 million in rent elsewhere … after costing $317 million up front, in cash and a written-off loan.

The Tories accuse the Liberals of secretly organizing “a $317-million bailout to a private company.”

This isn’t quite right: we’ll end up owners of an office building. The obvious alternative, given the unpleasant facts, is to let MaRS default and then Alexandria gets the building, but that’s actually worse.

The documents the Tories released say the naming rights to the building are on the verge of being used to get “the largest single donation to any group of Canadian academic institutions.” Something that’ll justify putting up statues — literally statues, plural — at the building and at the nearby teaching hospitals. So there’s extra value, yet unspecified, in keeping it in public hands.

If the Tories are overplaying their hand, the Liberals are pooh-poohing the whole thing shamelessly.

“This would be a very, very good thing for the consolidation of government offices into a building that the government owned,” Liberal Leader Kathleen Wynne said Thursday. She tried to pass it off as a simple real-estate deal.

Yeah, well, it’s not that, either. It’s making the best of a bad situation. It’s buying a building when the Liberals’ explicit policy is to sell them off, to turn modern lab space into offices. It’s absolutely not how any part of the plan was supposed to go.

As a one-off, it might be excusable: the federal government, in the person of Jim Flaherty, thought this was all a great idea, too, and sometimes people get things wrong. Added to a long list of Liberal screwups, it supports the central message of both the Conservative and New Democrat campaigns: The Liberals are terrible, terrible managers.

A billion dollars blown on eHealth before it did much of anything. The ORNGE air-ambulance system, with its vastly overpaid executives and international adventures. A $700-million Presto smartcard system. The Samsung green-energy deal, scaled back sharply after it was signed.

Big plans, big projects, big dreams — and none of them worked out they way they were supposed when they were joyfully announced.

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